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TMI Blog2010 (4) TMI 754X X X X Extracts X X X X X X X X Extracts X X X X ..... n 80-IB(10). The Assessing Officer made disallowance of deduction under section 80-1B(10) for the reasons stated in the assessment order and determined the total income at Rs. 10.07 crores. The assessee presented the first appeal before the learned CIT(A) on 22-1-2009. It was noted by the ld. first appellate authority that there was failure of payment of self-assessment tax amounting to Rs. 43,83,830 on the income returned by the assessee. Ten days' time was given to the assessee for the payment of self-assessment tax. The assessee stated that it had recognized profit of Rs. 1.30 crore on accrual basis in spite of the fact that the entire receipts including profit were not realized. It was further argued that there was no liquidity whatsoev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. At this stage, it will be fruitful to have a look at the provisions of section 249(4), under which section the impugned order has been passed. It runs as under:- "249(4) No appeal under this Chapter shall be admitted unless at the time of filing of the appeal, - (a) where a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him; or (b) where no return has been filed by the assessee, the assessee has paid an amount equal to the amount of advance tax which was payable by him : Provided that, in a case falling under clause (b) and on an application made by the appellant in this behalf, the Commissioner (Appeals) may, for an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penal provision, then it is mandatory, but if no penal consequences follow on non-fulfilment of the requirement, then usually it is a directory provision. The Hon'ble Karnataka High Court in M.L. Srinivasa Shetty & Sons v. State of Karnataka [1992] 193 ITR 548 had the occasion to consider the distinction between a mandatory and directory provision. It held : 'In other words, one of the crucial tests to determine whether a particular statutory requirement is mandatory or directory is that the court has to see whether any penal consequences will follow by the non-compliance with a particular statutory requirement. If no penal consequences are indicated, then it would be safe to infer that the statutory requirement was directory and not oblig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake the action as invalid. As soon as such requirement is fulfilled, the deficiency stands removed and the action is validated. It can also be seen from the mandate of section 139(9), dealing with the defective return, which provides that on the removal of defect, the return becomes valid. In the like manner if the appeal filed by the assessee is only defective, it assumes validity on the removal of such defect or irregularity. 8. In the present case, the ld. CIT(A) granted a time of ten days to the assessee for depositing the tax due. It was only on the failure of the assessee to do so that the appeal was dismissed as unadmitted. If the assessee had made good the deficiency within the period often days, then the appeal would have been adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to this question needs to be given in affirmative. 9. The objective behind section 249(4) is to ensure the payment of tax on income returned before the admission of appeal. If such payment after the filing of appeal but before it is taken up for disposal validates the defective appeal, then there is no reason as to why the doors of justice be closed on a poor assessee who, could manage to make the payment of tax at a later date, The stipulation as to the payment of such tax ante the filing of first appeal is only directory and not mandatory. Whereas the payment of such tax is mandatory but the requirement of paying such-tax before filing appeal is only directory. When the defect in the appeal, being the non-payment of such tax, is remove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g some adjustments. After the assessment in the individual capacity, the AOP was also assessed to tax on the same income. However tax paid in individual capacity was not adjusted. Aggrieved thereby, the assessee preferred appeal against the order of the Assessing Officer. For non-compliance of provisions of section 249(4)(a), the learned CIT(A) did not entertain the appeal. The assessee filed one more appeal before the learned CIT(A) after making the payment of tax which was dismissed on the ground of delay and the order so passed was upheld by the Tribunal. When the matter came up before the Hon'ble High Court, it was held that the defect of compliance under section 249(4) was made up by the subsequent action of adjusting the tax and the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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